What is Social Media ROI?

Social media ROI, which stands for return on investment, measures the amount of money social media marketing efforts return to the company or organization. Measuring return on investment in social media marketing tends to be trickier than when measuring ROI for more traditional marketing methods. This is because social media tends to be less transactional.

As social media technology advances, however, it becomes easier for companies and organizations to measure the social media ROI. For example, when the social media network Facebook® allowed users to open an e-commerce store from the profile or fan page, it created a situation where social media ROI measurement became more transactional and easier to measure.

Mobile applications are also making it more possible to measure social media ROI. Mobile apps that allow users to check-in at specific locations and redeem digital coupons in the process all make measuring the ROI on social media easier and more tangible.

Other social media experts argue that social media ROI is not just about creating transactions. These experts argue that social media ROI also entails the level of engagement of prospects, customers and followers. Social media is another touch point that businesses and organizations have with prospects and customers, so it is also an opportunity to engage.

Other measurement options come from the referrals or word of mouth advertising efforts using social media. A business or organization can measure, for example, how many likes it receives on its Facebook® page. Another social media measurement includes how many new customers it lands when an existing customer or advocate uses social media tools to spread the word on a sale, new product or other information about the company.

For example, group-buy websites offer a daily deal, but it requires a certain number of buyers to trigger the deal. These group-buy platforms often provide incentive to those who want the deal to spread the word to other people they know through their social media outlets. These platforms provide social media tools to help users spread the word and even give the deal to the advocate for free if they forward it to their social networks and at least three people they shared with opt in for the deal as well.

Social media ROI is a calculation of the profit from a social media marketing effort. Measuring ROI from social media goes beyond the facts and figures and is more of an intangible measurement, such as following and engagement on social media networks.